© Henry Weingarten Last Updated:
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While the internal Stock Market astrology,
as in 2003, is mixed, the external risk potential is
horrific!
Short term, If you were unhappy about markets March
2000 and September 2001, don't expect to be singing in the rain JUNE
2004!
Long Term, we consider the long term economic fall out
of the US Iraq invasion quite severe and believe
that global markets can retest or break their 2003 lows.
It is only a matter of time before more and more savvy international
investors move more of their money out of the US stock market
and invest in countries that they feel are in better shape than the
US.
Stock selection continues to be paramount and count more than sector rotation;
it is as important as market timing!
Given that the
traditional "Buy and Hold" investing
strategy will continue to under
perform, we again recommend trading 50%
in "investing" portfolios in 2004.
TAKE/PROTECT PROFITS CONTINUOUSLY.
For 3 years
we warned:
LEARN THE MARKET LESSONS
OF 2000, BECAUSE THEY WILL REPEAT
IN 2003 and 2004.
Now that the forecast is true, come June 2004,
many investors will be berating themselves with
why didn't they sell when the Nasdaq was above 2000?
Why didn't they learn their lesson in March 2000?
BOTTOM LINE:
DON'T BUY AND HOLD. THE STOCK MARKET
IS LIVING ON BORROWED TIME. I ADVISE KEEPING
A BALANCED AND DIVERSIFIED PORTFOLIO, ELIMINATE
ALL MARGIN DEBT AND BE CASH RICH.
MARKET NEUTRAL INVESTING FOR EXPERIENCED INVESTORS
In order to sleep soundly at night, I
recommend a Hedge Fund style Market Neutral
Strategy in 2004. This involves both buying under
valued and selling short overvalued stocks. This
is best done in industry pairs as it involves the smallest
risk, although the most work. Alternately, stocks
can be hedged against their individual sector membership
or the overall market: Buying a stock and selling its sector
or broad market index, or Selling a stock and buying its sector
index or the overall market.
If you are bullish, I would recommend
a long/short ratio of 2-1.
If you incline more to the bearish camp
as I do, then a long/short ratio of 1-1 and 1-2
(depending on the short term astrological trend) is preferable.
There are five primary celestial and terrestrial phenomena affecting world events and global markets in H2 2004:
1. US DOLLAR REMAINS UNDER PRESSURE IN 2004
Will the dollar stabilize, weaken
or strengthen going forward? Short term, US dollar has strengthened
since falling over 40% against the Euro since late 2001 when we
began to forecast a major Dollar reversal. Unfortunately, for Americans,
this is an intermediate, but not long term trend reversal. Before year
end, with US and Euro interest rates closer to par, the dollar will have
resumed its secular decline. We therefore continue to recommend that
All investors need to diversify their investments
globally. Many blue chip foreign investments are more
attractive with stock prices cheaper by most valuation measures:
price to earnings, price to sales and price to
book. US interest rates will rise not only for future
inflationary worries but also due to a lower
US dollar. Our US dollar Index Fair Value is 88
with .85 to .82 again possible in H2 2004. One lurking
possibility is that it may become necessary
for the FED to defend the US dollar or that
outright intervention from the US Treasury in the currency markets
may be necessary. However, Spring and Summer 2004, we could also see
the US dollar as high as .93 to .95. If so, this would be a MAJOR
sell signal for us. This will reverse either if the US changes its
economic policies (unlikely before November), or the US dollar is trading
below .85 with stability, i.e. .80-82 support seems likely to hold.
Our recommended
US equity portfolios international
stock allocation remains 50%.
2. A WAR TIME ECONOMY: GUNS AND CAVIAR REDUX
3. THE END OF THE HOUSING BUBBLE
Housing, along with Commodities and physicals
can be viewed as an Asset Class along with
Stocks, Bonds and Cash by many investors.
Positively, there is the enjoyment
factor: most woman would prefer to have
an additional 100K in a home than in a portfolio.
Housing also appeals to safety concerns
in times of trouble, but home buying is
cooling. Record low interest rates have ended.
Other negatives include the fact that the ratio of
home prices to home rental rates is too high, while
the value of individually owned residential
property to disposable income is at a 50 year high.
Classically, Real Estate weakens 12-24 months
after a market collapse. Thanks to the Fed, this did not
happen when individual stock prices returned to pre-1998
pricing. I still see the probability of a
housing drop of 10-35% [depending on location and
individual property] over the next 6-18 months.
Still, Saturn will be in Cancer (Housing) for another year. Let's
not forget what Saturn in Gemini (Communications)
did to Telecoms. Hopefully it will NOT be
that bad: Favorable tax treatment, along with continuing
demand, could make this a slowing market with
a soft instead of hard landing before July 2005 when Saturn
leaves Cancer [home] for Leo. Either way, buyers
will benefit more than sellers.
In 2004, property prices in Australia, the US, the UK, Ireland, the
Netherlands and Spain are at very high levels. They have risen exorbitantly
in relation to average income. It could be said [The Economist]
that house prices are over-valued by up to 33% as low interest rates
have allowed more and more people to borrow large amounts to buy a
home or investment property. The Bank for International Settlements
(BIS) is concerned about this situation. Its researchers have found that
historically, the bigger the boom in house prices, the bigger the bust.
Central bankers are as likely to be concerned about this as financial
astrologers. Saturn in Cancer (home) suggests it is more than past time
to begin (accelerate) reducing exposure to the still booming housing sector.
Global Stock markets in 2004 will be determined largely by answering three questions:
Q1: How will Bush's military adventures affect Oil prices and help or hinder the War on Terror?
Q2: Who will be helped/hurt the most by the lower/higher US dollar?
Q3: What P/e's will investors be willing to pay for modest corporate growth?
WILD CARDS: Range from FASB rules to expensing options (strong NASDAQ hit 44% reduction) to allowing partial privatization of social security (a bond hit/market bonus).
HOW HIGH IS UP? HOW LOW IS LOW?
VALUE WITH GROWTH
Capital
Preservation is
again most important
for global investors; hence,
we stress caution. We no longer recommend
an investment strategy
paradigm of BUY and HOLD
Growth stocks with at least reasonable
valuations based on current
and future profits. Market timing will be the key.
Classic "Buy and Hold" is passé: Stock picking, more than
sector membership, will
rule in 2004. Successful investing
will depend on knowing:
When all the good news
has already been factored
into the share price, at what
price is the valuation just too
high?
When all the bad news
has already been factored
into the share price, at
what price is the valuation too
cheap?
Any and all investing profits need to be protected against
future bear assaults in 2004.
Trade more (50%
of portfolio) and
take/protect profits at 10%-20%
profit points for long term non-core
holdings.
LEARN THE LESSONS OF 2000, THEY REPEATED IN 2003 AND 2004 WITH EXCESSIVE
SPECULATION:
1) Buy carefully and
when stock valuation becomes
super frothy again, SELL.
2)
Be careful about owning stocks
that are “priced to perfection”,
they can only disappoint.
3)
It is NEVER “different this time.”
4)
Ultimately, profits matter.
The Horoscope is a MAP of TIME and PLACE - here is a brief overview of
selected global
markets:
Country
risk is re-emerging as a corollary to
anti-globalization forces. Sophisticated
investors today are rightly
concerned about being overly invested in any
one country or currency.
EUROPE - A global
alternative
to the US
On a global basis, Europe is cheaper and more reasonably
valued than the US. We are buyers of Euro's 116 to 117.50 and sellers
above 126. Our Fair value is currently 121.50.
NORTH AMERICA
- Traders paradise
OTHER-
Opportunities
for savvy investors
ONLY .
We continue to advise caution for emerging
markets unless you monitor
them very closely. They "behave like rich-country
ones on speed, both up and down". It is very important for investors
to distinguish between high and low risk countries.
In addition to the obvious political and currency risk, many are
too loosely regulated.
Current AFUND ratings on the BIG Four
Emerging Markets are: Brazil (Watch), China
(Wait), India (Hold) and Russia (Watch). Later
in 2004, the global investing
landscape may be dramatically
different.
WSNW subscribers should periodically review our S: AFUND GLOBAL 12 - for our favorite global blue chip long term investments.
LONGER TERM
2005: The fifth year of each decade has been positive since 1881. We see no reason at this moment to disagree with history.
March 29, 2006 is a Total Solar Eclipse. In 2006 Jupiter squares Neptune 1/28, 3/16 and 9/24. Also we have the first pass of Saturn opposite Neptune 8/31 and again in 2007 (2/28) and 6/25).
2007: Jupiter Square Uranus: 1/22, 5/11, 10/9 and then in December 2007: Jupiter will be conjunct Pluto. Two Total Lunar Eclipses March 03 and August 28, 2007.
The low point of the nodal cycle is reached in 2008, when Pluto ingresses into Capricorn with one Total Lunar Eclipse February 21 and a Total Solar Eclipse over China 8/1/2008.
Jupiter conjunct Neptune in 2009:
5/27, 7/10,
12/21. Total Solar Eclipse July 22, 2009 (India/China).
The next epic shifting planetary configurations
in 2010/2011 of Jupiter conjunct Uranus AND Jupiter
opposition Saturn as well as Uranus
entering Aires and Neptune enters Pisces
and a total Solar Eclipse July 11, 2010 and a Total Lunar
Eclipse December 21, 2010. ALL precede the
December 21, 2012 Mayan end date.
Also we have 7, yes 7 Uranus-Pluto squares from
June 24, 2012-March 17, 2015--Wowie! Some of the
more extreme forecasts made for this time period include
alien visitations/invasions, catastrophic asteroid impacts,
violent volcanic eruptions and massive earthquakes. We
will give our views here no later than 12/21/2009.
I like to begin with one or more of the following 4 criteria:
A: CASH RICH, WELL MANAGED AND PROFITABLE,
B: UNLOVED BUT UNDERVALUED,
C: POSITIVE MOMENTUM AND MONEY FLOWS
D: GOOD HOROSCOPE OR IN AN ASTROLOGICALLY FAVORED SECTOR:
1) Jupiter in Virgo until Q4
when Jupiter enters Libra.
Spring/Summer 2004's favorite
strategy will be Market Neutral Hedging:
Buying a strong stock while shorting an appropriate
index (SPX or Nasdaq), or Pairs Trading
- buying a strong company and selling a weak
one in the same sector usually makes money whether the
market moves up, down or sideways. Over the next
few months, we will not so much be investing as doing
short term trades such as shorting Nasdaq Internut-like
fantasies.
1. The US dollar will fall again, select Country I-Shares or Foreign Blue Chip companies to hedge:
BIOTECHNOLOGY: e.g. BBH and IBB or heavyweights Amgen
(AMGN), Cephalon
(CEPH) and Genentech (DNA) can be trading
buys on strong pullbacks.
I prefer to invest in companies that have multiple
products in clinical development.
SUCCESSOR ENERGY: e.g.
Vestas,and Gamesa. Watch: FuelCell Energy (FCEL),
Hydrogenics (HYGS), Intermagnetics General Corporation
(IMGC), Mechanical Technology (MKTY) and Quantum Technologies
(QTWW).
NANOTECHNOLOGY:
e.g. NNZ or Veeco Instruments (VECO) and FEI (FEIC).
6. SRI STOCKS
Given the increasing risks to global sustainability,
we believe there is a corresponding increasing need for increasing
exposure to SRI stocks in one's long term investing portfolio.
One list to refer to annually for an initial stock screen
is SustainableBusiness.com's annual list of the 20
World's Top Sustainable Stocks. Another is to periodically
check our Neptune Fund selections.
*7. AFUND CLIENTS
Business Astrologers
know that the best
way to predict the
future is to create it.
With strong
Disclaimers and with an informed but
obviously biased view,
I am doing my best to
help create investor wealth
for client companies we
consult for including
International
High Tech Industries
[IHITF], Health Sciences (HESG) and
Karma (KRMA).
2004 Market Forecast |
2003 Market Forecast |
2002 Market Forecast |
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